Law: Income Tax Act, 1922

Section: 10,10(2)(xi),66(1)

Law: Income Tax Ordinance, 1979

Section: 136(1),136(2)

(a) Income Tax Ordinance (XXXI of 1979)---S. 136(1) & (2)---Income Tax Act (XI of 1922), S.66(1)---Reference application having been dismissed under S.66(1) of the Act of 1922 as barred by time, could not be treated as one under S.136(1) of the Ordinance--- Such an application thus would not lie under S. 136(1) of the Ordinance of 1979. Commissioner of Income-tax v. Asbestos Cement Industries Limited 1988 P T D 227 fol. (b) Income Tax Act (XI of 1922)-- ----S. 10(2)(xi)---Income Tax Ordinance (XXXI of 1979), S.136(2)---Reference to High Court---Loss of current assets in former East Pakistan---Income Tax Appellate Tribunal had given a finding that amount claimed by assessee was a bad debt ---Assessee being entitled to the allowance on bad debt, High Court declined interference with the finding of fact by Tribunal. Commissioner of Income-tax v. Grindlays Bank Ltd. 1991 P T D 569 and National Bank of Pakistan 1976 P T D 237 fol. JUDGMENT MUHAMMAD HUSSAIN ADIL KHATRI, J: -- The Assessee-respondent which is a Banking Company engaged in providing specialised credit to agriculturists, had claimed a loss of Rs37,17,25,000 (Rupees thirty-seven crore, seventeen lacs, twenty five thousands) as loss of current assets in former East Pakistan. At the assessment stage, this claim was disallowed on two counts. Firstly, on the ground that the loss having occurred in 1971, did not pertain to the assessment year 1977-78 and secondly, the liabilities were on account of borrowing from State Bank and other sources. On the appeal filed by the Assessee, the Appellate Assistant Commissioner of Income-tax held that the disallowance was not justified. The department filed an appeal before the Income-tax Appellate Tribunal which was dismissed for the reason that the loss on current assets in respect of former East Pakistan was allowable as it was in respect of bad debts which could not be claimed under section 10(2)(xi) in assessment year 1972-73 as it was then premature and was rightly claimed in assessment year 1977-78, as at that stage, there was no foreseeable possibility of recovery of loans advanced in former East Pakistan. It was also held that the question of settlement of…

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